Florida is undoubtedly one of the best places in America for those interested in profitable business opportunities. Hence, it is not uncommon to see people investing millions of dollars to buy a business in Florida.
However, the task is not as easy as it seems. Anyone interested in buying a Florida business must put some effort into detailed research, as the buyer is ultimately responsible for checking if whether a company is worth the investment or not.
In this sense, we highly recommend that you seek guidance with a business attorney in Florida to oversee the business acquisition procedures.
In this article, we compiled a full guide containing the essential questions to ask when buying a business in Florida.
The Golden Rule Is to Ask the Right Questions
Sellers may be required to disclose certain information about their businesses, but it is not enough. As a buyer, you need to make sure that you have every essential information about the company before closing the transaction.
1) Why Are You Selling Your Business?
Digging into this type of information may be a little difficult, but this is utterly necessary. It happens because, commonly, a business owner is selling the company as a way to get rid of it.
Some common issues that may lead an owner to sell a business include:
- Low profitability.
- Growing expense for maintenance.
- Difficult governance.
- Decreasing demand for a certain product or service.
- Fierce competition in the area.
A good idea to gather this type of information is by asking around the area or talking to employees. This way, it is possible to have a realistic sight of what is going on behind the stage.
2) How Does the Owner Make a Living?
The owner of a successful business does not need to rely on different sources of income to make ends meet. A solid company is profitable enough to provide for its owner.
Remember to ask the owner to let your accountant review the company’s financial records. This detailed checkup will permit you to see if the business is either profitable or not.
3) Is the Business Affected by Seasonality?
Commonly, most businesses have seasonality, being more crowded at certain times of the year. However, you need to evaluate the level of seasonality before acquiring a business. Depending on the type of business, extreme seasonality can lead to a potential bankruptcy process.
Before buying a business in Florida, which is a remarkably touristic state, you need to evaluate how much the company is affected by seasonality.
4) What Is the Level of Demand for This Business?
This factor is crucial, so it is essential to take a realistic look at the local Florida market to find the answer. The best business opportunities are those in which the demand is either stable or ever-growing.
5) What Is Included in the Sale of the Business?
This question is essential, as you need to ensure that you will have everything necessary to operate the business included in the sale. Before closing the transaction, make sure to negotiate for everything that you need, including equipment, assets, inventory, intellectual property, etc.
6) What Obligations Will I Be Taking On?
When purchasing a new business in Florida, you will have both assets and liabilities. Remember to find what obligations you will be taking on once you start owning the business. The most common obligations include existing contracts, loans, pending lawsuits, unpaid taxes, warranties, judgments, and liens.
A good strategy is to make an exhaustive list of every existing liability attached to a business before the closing procedure. Also, employing a business attorney to help you find and list each existing obligation would be incredibly helpful.
7) What Types of Licensing or Permits Do I Need?
To avoid being precluded from operating your business, you need to make sure that you have all the necessary licensing and permits. This list includes any form of registration, licensing, or permits required for your business, such as:
- General business permit.
- DBA registration.
- Business entity registration.
- Occupational/professional licenses.
- Health permits.
- Liquor licenses/food permits.
- Building/zoning permits.
- Environmental permits.
- Tax registration/ID numbers.
Before closing a deal, you need to compile an exhaustive checklist including all permits you will need for operating your business, also anticipating the costs related to each one.
8) Is the Price Reasonable?
Most business buyers would start by asking this last question. To find the answer, you need to value the business considering several factors. A solid business valuation must include data regarding the market approach, the income approach, asset approach, and a professional business appraisal.
This way, it is possible to determine if the asked price is worth the investment or not.
How to Buy a Business in Florida? – Final Thoughts
Buying a business in Florida requires a strategic approach, given the number of factors involved in the process (valuation, appraisal, undisclosed information, etc.).
We can guide you throughout all the process of buying a business, saving you from wasting time and money. Get in touch with Jurado & Farshchian, P.L. today by calling (305) 921-0440 or emailing Romy@jflawfirm.com to schedule a consultation.